Expanding cold beer sales and allowing retail sales of alcohol on Sundays are something many Indiana residents have long wanted and an issue that could be gaining traction. But a complex set of forces has kept that from happening.
Dwight Adams/IndyStar

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Cold beer is kept in coolers behind the counter at a Ricker's convenience store in Columbus, Ind., Thursday, March 23, 2017. Servers must bring the beer to a patron's table in the store's restaurant area. After the chain's lawyers realized the in-store restaurants qualified for cold beer sales, this Ricker's location and one in Sheridan, Ind., obtained the required licenses to serve cold beer to patrons for consumption in the restaurant or to-go. The Columbus location also sells liquor for consumption outside of the restaurant. To many in the liquor store industry, Ricker's use of this loophole seems like an attempt to cut into an area that has previously been domain of liquor stores, which are subject to additional regulations.(Photo: Jenna Watson/IndyStar)Buy Photo

When Indiana lawmakers swiftly closed a loophole this spring that had enabled Ricker’s convenience stores to sell cold beer, it was easy to see the hands of the liquor store industry at work.

A liquor store owner raised some of the earliest objections to the Ricker’s maneuver. Liquor store lobbyists were in on key meetings with lawmakers to address it. And the final bill ultimately went through a committee chaired by a senator who is the top recipient of liquor industry campaign money.

The episode was just the latest win for a liquor store industry that’s fought tenaciously for years to preserve its virtual monopoly on cold beer — and that’s deftly thwarted the expansion of Sunday alcohol sales.

Liquor stores have prevailed despite being outnumbered 2-to-1 by convenience stores thirsting to sell cold beer and despite being dwarfed by the big-box national retail chains with an interest in lifting the Sunday alcohol sales ban.

For its prowess, the liquor store lobby is frequently described with one modifier — powerful.

The source of that power is often assumed to rest in a deep well of campaign contributions. But an IndyStar investigation has found that the liquor store industry’s influence is much more extensive than cash.

It’s a special recipe of lifelong ties with lawmakers, brass-knuckle retail tactics against industry critics, a potentially improper channel of political money and a tactical advantage in legislative fights: Wins aren’t necessary; it’s good enough to simply fight to a draw.

The liquor store industry’s ability to outfox its opponents is about to be tested more than ever. Polls show wider public support for expanding Sunday alcohol sales, with bills being drawn up to make that happen. And the Ricker’s fracas brought the public’s attention to the quirks in Indiana alcohol laws, prompting lawmakers to create a special commission to look at reform.

For their part, liquor store owners chafe at references to their power and influence at the Statehouse, particularly because they are up against giants such as Walmart, CVS and Walgreens.

“We don’t fly around on corporate jets,” said Andy Lebamoff, owner of the Cap ‘N Cork liquor store chain. “Do we donate money to the politicians? Absolutely. But that’s the nature of our industry. That’s the nature of a lot of industries.”

Long history, personal relationships

The liquor store industry is one that traces its history back to Prohibition, with the highly valued permits to sell alcohol passed down through families from generation to generation.

Along with the licenses, parents sometimes pass on to their children their old contacts with local political leaders, says Paul Helmke, the former mayor of Fort Wayne and a professor at Indiana University’s School of Public and Environmental Affairs.

Fresh political candidates often find that, in meeting influential business leaders, they must pay homage to the owners of liquor stores. “And so, 20 years later,” Helmke said, “they are people (lawmakers) are going to listen to.”

Close ties between lawmaker and liquor store owner are forged in other ways, too. They live on the same streets, attend the same churches and send their kids to the same schools. One such example is Lebamoff, who owns 15 liquor stores in Fort Wayne.

Lebamoff regularly sees state Rep. Robert Morris, R-Fort Wayne, a longtime friend, around baseball fields where their sons play. He’s been friends for 30 years with Senate leader David Long, R-Fort Wayne, who buys his favorite wine, cabernet sauvignon, in Lebamoff’s store, where they may exchange a few words on issues of the day or talk about Wabash College, their shared alma mater. Such ties, Lebamoff said, go further than campaign contributions. “It’s not because I donate money to them,” he said. “It’s because I grew up with them.”

Long said personal ties don’t outweigh the public interest. But he said liquor store owners have found a “sympathetic ear” from lawmakers because they’ve made a good case for themselves — that they are small, locally owned businesses whose industry is being challenged by big corporations.

While liquor stores must be owned by people living in Indiana, that’s not the case for convenience stores, who may have out-of-state owners, and big-box retailers, who may be multinational corporations like Target and Walmart.

And lobbyists for big box and convenience stores simply haven’t been as effective in making their case, Long said. “These guys have been outhustled by the little guys, in many people’s eyes. ... (They) have made the argument that the big guys are just bullying them around and they are fighting for their lives.”

Sen. Ron Alting, R-Lafayette, a gatekeeper for alcohol legislation at the Statehouse, knows people in several segments of the alcohol industry. But, he said, “If you look at the lobbyists, it’s always been the high-priced suit people representing big-box.”

While there are locally owned convenience stores — Jay Ricker lives in Anderson and has 56 Indiana convenience stores — their alliance has been less focused, Helmke said. “My sense is they haven’t had the longtime common interest that the liquor retailers have had."

Big contributions, narrow agenda

While personal relationships are important, liquor stores haven't ignored two other traditional avenues of influence — campaign contributions and lobbying firepower. In both arenas, they've more than held their own.

While the combined spending of convenience stores and other alcohol retailers exceeds that of liquor stores, the advantage is watered down in several ways.

First, convenience stores and big-box grocers have different alcohol priorities. For convenience stores, it's gaining the ability to sell cold beer. For big-box, groceries and pharmacies, it’s the ability to sell on Sundays. At times, the interests overlap but they can also compete for legislative traction.

Perhaps more importantly, there are the unrelated matters that divert their political capital — issues such as gas and cigarette tax proposals, and property tax matters.

Liquor stores, meanwhile, have a singular focus — preserving the status quo. To that end, the largest share of their contributions have flowed to the senator whose public policy committee has been a graveyard for bills to expand cold beer and Sunday alcohol sales — Alting.

Liquor stores have given Alting more than $90,000 since 2011. Contrast that with about $4,000 from big-box retailers, supermarkets and pharmacies; and $3,000 from convenience stores.

Alting and other legislative leaders dismiss suggestions that contributions from liquor stores — or any other interest group — play a role in how they craft the state's laws.

"That has nothing to do with any of it," Alting said.

House Speaker Brian Bosma, R-Indianapolis, agreed: "There is no relationship whatsoever, in my experience, between political contributions and public policy decisions here at the General Assembly."

The underdog liquor stores also have invested heavily in lobbying firepower at the Statehouse. Since 2011, state records show:
• Liquor store interests have spent at least $822,000.
• Convenience stores have spent more than $703,000.
• Big box stores have spent in excess of $618,000.

Again, other alcohol retailers spent a higher combined amount but liquor stores amplified their reach with their narrow focus on alcohol issues. To do that, they’ve maintained a stable of influential lobbyists, including former lawmakers Matt Bell and Matt Whetstone, the latter a former key adviser to Bosma.

Convenience store lobbyists, meanwhile, have tried to juggle a variety of issues, the cigarette and gas tax proposals being in the forefront during the last session. It wasn’t until the Ricker’s controversy exploded in March that convenience stores brought in some extra lobbying firepower — Tony Samuel, who was vice chairman of President Donald Trump’s campaign in Indiana, and former House Speaker Mike Phillips.

Liquor industry muscle

The power of the liquor store industry stretches far beyond the Statehouse, influencing other players in the alcohol industry from small breweries to distributors to giant companies like Anheuser Busch.

The source of that power is the liquor store stranglehold on the sale of cold beer for carryout — a privilege concentrated in the hands of a small number of players.

While it likes to tout the local liquor store as a small business, the industry has become increasingly consolidated. Just 20 owners now control one-third of the roughly 1,000 liquor store permits in the state. In many parts of Indiana — Bloomington, Columbus, Shelbyville and elsewhere — competition between liquor stores has disappeared. By some estimates, as many as one million Hoosiers have only one company to go to for cold beer.

The result: Liquor stores possess significant leverage over other segments of the alcohol industry.

It is leverage that liquor store owners aren’t afraid to wield in an effort to silence opposition.

In 2015, the first time a Sunday sales bill was given a hearing in the House, liquor stores took aim at an Indiana brewery.

Cam Carter, a minority owner of the Triton Brewing Company and then an economic development advocate for the Indiana Chamber of Commerce, made a passionate plea in support of Sunday sales — and criticized what he called "concierge legislating" on behalf of the liquor store industry.

Within hours of his testimony, several liquor store chains canceled orders or removed Triton products from their shelves, costing Triton tens of thousands of dollars, according to several people familiar with the boycott.

In 2008, during one of the first major pushes to legalize Sunday alcohol sales, grocery and convenience stores sought lobbying help from the Corydon Group, an Indianapolis firm.

Corydon took the job, but soon found one of its other major clients, Anheuser Busch, pressuring it to ditch the Sunday sales campaign.

Anheuser Busch had been pressed to exert its influence by Indiana’s liquor store industry, according to Scot Imus, who was involved in the coalition, and another source involved in the discussions. Corydon stayed with the Sunday sales campaign but lost $66,000 a year in business with Anheuser Busch — and the chance to build a relationship with one of the world’s largest brewers.

An Indiana beer wholesaler, who, like other sources on this subject asked not to be identified for fear of retribution, said liquor stores sought political support with offers of special store promotions for his products, including price discounts to customers. The wholesaler said people who have expressed views contrary to the liquor store line have seen the retail prices of their products marked up, and the special promotions disappear.

Jon Sinder, co-owner of Crown Liquors and leader the liquor store trade association, said he was unaware of any such pressure tactics. “That’s not good business as it relates to our consumers and it’s not something we would do," he said.

He emphasized that there was no industry-wide effort to intimidate suppliers, though he said he can't speak for the actions of individual store owners.

Bankrolling the war, secretly

Aside from its own resources, the liquor store industry tapped into another stream of cash to fight its battles — a source that’s been deemed questionable, if not a violation of state regulations.

Monarch Beverage — the state’s largest beer distributor and a political powerhouse in its own right — has quietly funneled cash to the liquor store trade association for roughly 20 years.

Publicly, Monarch has claimed its neutrality on the Sunday sales and cold beer debates, noting that it has customers on both sides of the fight.But Monarch's CEO Phil Terry acknowledged in an interview with IndyStar that it's more profitable for his company to sell beer to liquor stores, which purchase larger quantities and require fewer shipments. An expansion of cold beer to convenience stores would change those dynamics.

“Financially we don’t think cold beer would be in our benefit,” Terry said, “But again, we’re not taking a position on that.”

Still, Monarch has pumped as much as $84,000 annually to the liquor store industry as it fought its war against expanded cold beer and Sunday alcohol sales.

The payments violated state regulations intended to put distance between distributors and retailers, according to the Indiana State Excise Police. Monarch insists its contributions were permissible and is contesting the citation.

Terry said the payments had not raised concerns in the past. “No one objected to it before,” he said, “but maybe no one knew.”

The size of the contributions shocked liquor store competitors, who said so much cash would be a game-changer for any trade group.

Alting, the Senate public policy chairman who has routinely blocked cold beer and Sunday alcohol legislation, tried during the last General Assembly to make such contributions permissible.

As he discussed his proposal during a hearing attended mostly by industry insiders, Alting expressed relief no reporters were present.

“Do you see how many press was here?” Alting said in a video recording of the February hearing. “None, which is super. I’m glad they’re not."

"If they ever caught wind the importance of what’s in this bill, trust me, they’d be lined out the door on what the possible outcome could be on this.”

Ultimately, Alting’s effort failed.

State Sen. Ron Alting(Photo: Taya Flores/Journal & Courier)

Asked recently to clarify his comments about the lack of media at the hearing, Alting said he couldn’t remember what he meant.

“I’m sorry,” he said. “I don’t know what I was referring to then. There’s been some water under the bridge since then. I’m not sure.”

Fighting a defensive war

One of the strongest forces preventing change in Indiana’s alcohol laws is what Todd Roberson, a senior lecturer in the Indiana University Kelley School of Business, simply calls political inertia.

That comes not just from that native Hoosier instinct to resist change but also from the fact any change creates collateral damage.

The Sunday sales ban at grocery and convenience stores has given Indiana breweries and distilleries, which are allowed to sell from their manufacturing facilities, a market niche on Sundays. But that Sunday ban leaves grocery and convenience stores with aisles of alcohol sitting idle one day in seven. Ending the Sunday restrictions would hurt liquor stores, which stand to lose market share as people spend more of their booze money on Sunday trips to grocery stores.

“Whenever you change the status quo somebody is going to end up hurt by it,” Roberson said.“That’s a political reality.”

In 2015, for example, a Sunday sales bill that liquor stores saw as a threat was altered to appease them. But those changes required grocery stores to partition off alcohol from the rest of the store and keep hard liquor behind the counter. Grocery stores saw that as untenable because it would mean millions in store renovations. In the end, they worked to kill their own bill.

“Every year here when there’s been a big bill to try to do something," Bosma said, "it gets all loaded up and collapses on its own weight.”

With so much at stake for the business interests, what's easily forgotten is the consumer.

CLOSE

It's illegal to purchase alcohol in liquor stores and grocery stores on Sunday in Indiana. But if you're in a pinch, there are a few ways to find booze.
Camille Hayes/IndyStar

Breaking the hold of inertia, in politics as in physics, requires an outside force. With alcohol laws, there hasn’t been much outside pressure in the way of a public revolt. Lawmakers say they hear people in their districts ask for Sunday sales, and they are aware of opinion polling.

But that support is wider than it is deep. Lawmakers have yet to be pummeled with waves of phone calls for wider Sunday sales. Nor have they seen marches on the Statehouse for easier access to cold beer.

“I think the public has been comfortable with it,” Long said. “I think that’s part of it.”

Still, there are indications that the comments from the folks back home — and the poll data — are starting to make a dent.

“I don’t think the people are screaming for change,” Long said, “but I think they are pushing for change more now than they ever have.”

Sensing a public demand for change, the liquor store association announced in September that it would support Sunday sales, although its unclear what conditions it might place on that support. And Alting, the senator who has blocked previous drives for Sunday sales, says the time has arrived for the change. He said he plans to introduce a Sunday sales bill in January.

The shifting landscape is worrisome to liquor store owners such as Steve Kohrman, who has a pair of shops in the small northeast Indiana towns of Leo and Grabill.

He and other liquor store owners bought into a system that had set rules they were willing to follow. Some paid up to $500,000 for their licenses. But now public attitudes are evolving and the future of an industry dating back to Prohibition seems in doubt.

To make ends meet as other retailers eat into market share, Kohrman said he's taken on a second job — as property manager for a Catholic parish in Fort Wayne. Now, when he hears comments about the prowess of the "powerful liquor store industry," he scoffs.